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3 Best Dividend Stocks for 2015

These stocks offer attractive valuations and promising income streams. Check them out.

We're still in the first quarter of 2015, and many investors are on the lookout for strong dividend-paying stocks. It's smart to seek dividends, as they can significantly enhance your total returns, delivering growth even when the overall market is sagging. Here are three of the best buys in the dividend world today.

Yielding 1.5%, Apple might not seem like the most promising dividend stock, but remember that it's a relatively new payer of significant dividends, and has been upping its payout regularly. In mid to late April, Apple will report its second-quarter results, and along with a widely expected dividend increase, some are speculating that there might be a "special" one-time dividend. After all, the company is now sitting on some $178 billion in cash. It's best to just expect a regular dividend increase, though (its last one was 8%), because most of that cash is staying overseas, to avoid U.S. taxes. (Like it or not, many companies have been keeping a lot of cash abroad instead of bringing it home.)

Let's focus on the business now, because that's what makes the dividend possible. You probably already know what a great disruptive innovator Apple is, and how it has created major new product categories, such as tablets and iPods. You probably know that its iPhone is very successful -- but did you know that it has sold 700 million of them, including 75 million in the last quarter alone? Meanwhile, the company has lots of new things cooking, such as its new Apple Pay system, a new Apple Watch, and some possibly big plans to enter and compete in the multi-trillion-dollar auto industry and the cable TV industry, too.

Apple has been building a powerful platform, between its phones, tablets, computers, and, increasingly, its Apple TV. It's a far-reaching technological ecosystem that gives the company more of a competitive advantage through switching costs, as it gets harder and harder for customers to switch platforms. Its brand power is hefty, too, giving it significant pricing power. The company's net margins top 22%, which is exceptional for a company producing a lot of hardware. With a recent P/E ratio near 17 and a forward-looking one near 13, Apple is far from overpriced and worth consideration.

Gilead Sciences, the $152 billion biotech titan, might not seem like it should be on this list, as many stock-quote sites will list it as paying no dividend. Well, one is coming soon, as the company just announced a $1.72-per-share payout beginning in the second quarter of 2015, which will give it a yield near 1.7% at recent prices. Gilead also announced a $15 billion share buyback program, to reward shareholders via a reduced share count. Buybacks are only smart moves if a company is undervalued, and that's a fair assessment for Gilead, with its recent and forward-looking P/E ratios of 14 and 10, respectively, which are well below its five-year average of 20.

Why should you like its business? Well, it's a leader in HIV drugs, generating more than $10 billion annually with them, has cardiovascular drugs Letairis and Ranexa combining for sales of more than $1 billion a year, and is also a top hepatitis C fighter, with its successful (and expensive) Sovaldi and Harvoni drugs -- which, together, also delivered more than $10 billion in sales in 2014. Gilead is expanding into fighting cancer, too, which is a huge arena.

One reason that Gilead's stock is appealingly priced is that it got whacked after its fourth-quarter results were posted. Revenue soared 135% year over year, but the company tempered near-term expectations in part because of pricing discounts that it plans to use to beef up market share. Meanwhile, the dividend is a smart move, as Gilead has more than $10 billion in cash and is generating more than $12 billion in free cash flow annually.

Best of all, as a big biotech concern, Gilead Sciences has many drugs in development in its pipeline. Not all will win approval, but some could become blockbuster hits, giving the company a strong tailwind.

A final stock to consider as a top dividend play is National Oilwell Varco, which is the 800-pound gorilla in the oil and gas services business, with a market capitalization of about $20 billion. (Its offshore drilling equipment market share is north of 60%.) The company's dividend recently yielded 3.9%, and it has been hiking that payout aggressively. And when I say aggressively, I mean that it roughly doubled its dividend in each of its last two increases. That might have you wondering if there's any room for further growth. There is -- it's only paying out about a third of its earnings in dividends.

National Oilwell Varco's dividend yield is sizable now in part because the stock has fallen, largely because of a massive slump in the price of oil. (Its shares have dropped more than 20% over the past year.) Still, it is performing rather well, with free cash flow of $1.9 billion annually and net margins topping 10% recently.

The downturn in the price of oil does have many investors skittish, but remember that it's simply a cyclical business, and that while downturns might result in some companies delaying orders they may have placed with National Oilwell Varco, eventually they will be opening their purse strings more widely. The company and the industry have gone through these cycles before. On top of that, Varco has a hefty order backlog of more than $12 billion to work on while the cycle progresses. If you are a long-term believer in the sturdiness of our oil and gas industry, then consider adding this solid dividend payer to your portfolio.

Author

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter... Follow @SelenaMaranjian